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Energy

Counties reap shale sales, but job growth still lags

View SlideshowRequest to buy this photoDISPATCH FILE PHOTOStorage tanks hold fracking brine and oil at Chesapeake Energy’s Kenneth Buell well in Harrison County. The shale-drilling boom in eastern Ohio has yet to produce as many jobs as early reports predicted.

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Development of Ohio’s Utica shale has led to a big increase in spending in the eastern part of
the state, but the job gains have been modest at best, according to a new report.

The Cleveland State University study finds that the oil and gas boom is strongest in 15 counties
in the eastern and east-central parts of the state, a band that stops short of central Ohio.

In those counties, sales-tax receipts were up 20 percent in 2012 compared with the year before,
based on an analysis of data from the Ohio Department of Taxation, the report said.

At the same time, employment in the area was up 0.6 percent in 2012. This is better than the net
losses the region had reported as recently as 2010, but exploitation of shale assets has not yet
proved to be a jobs bonanza.

“We are not going to see this field fully built out for another few years,” said Ned Hill, dean
of the Levin College of Urban Affairs at Cleveland State and co-author of the report. “It doesn’t
mean we’ve missed the boat. It means the boat has not yet pulled up to the dock.”

As of last week, energy companies had obtained permits for 840 Utica-shale wells and drilled 505
wells, according to the Ohio Department of Natural Resources. More than 700 of the permits have
been issued since the beginning of 2012.

The findings are in line with what Jill McCartney has seen in Caldwell, where she is executive
director of the Noble County Chamber of Commerce.

“There is some spending happening, so that’s good for everybody,” she said.

Many of the big purchases are by property owners who have received signing bonuses for leasing
their mineral rights, she said.

As for new jobs, she can name a few examples of new local businesses that primarily serve the
oil and gas industry. But many of the workers on drilling rigs and construction projects are
contractors from outside the state. That likely will change, she said, as local colleges ramp up
training programs geared toward the industry.

“You’re going to see our local kids hired out,” she said.

While the shale economy is on the rise, it would be much more robust if the state can lure an
ethane cracker plant, the report says.

A cracker is a facility that breaks down natural-gas molecules for a wide array of applications.
Without one, some of Ohio’s resources will need to be shipped out of state for processing, which
limits the income potential within the state.

The report on Utica shale development is one of the first in Ohio based on results, as opposed
to projections. Many of those other reports were “absolutely wretched” in their use of rosy
assumptions, said James Newton, an independent economic analyst in Delaware.

He said this report shows signs of economic progress, but not yet enough to cause
excitement.

“Strong growth from a low level doesn’t necessarily mean great things,” he said.

The study’s authors classified each county’s shale resources with a combination of its geologic
attributes and the number of shale wells that have been drilled.

There are 15 counties with “strong” shale resources, 30 with “moderate,” 37 with “weak,” and six
with almost no measurable resources.

In central Ohio, Franklin, Madison and Pickaway counties are said to be weak, while Delaware,
Fairfield, Licking, Morrow and Union counties are listed as moderate.

Cleveland State has changed many of the classifications since a version of the list was compiled
in March, based largely on new data. Five counties were upgraded from weak or moderate to strong:
Holmes, Jefferson, Monroe, Noble and Wayne. Three counties were downgraded from strong to moderate:
Ashtabula, Coshocton and Geauga.

The changing appraisal of the counties is one of many signs that this is a quickly changing part
of the economy, Hill said. He expects to make further revisions as more data become available.